Freddie Mac Announces Numerous Servicing Policy Changes

Freddie Mac Mortgage Servicing

On December 18, Freddie Mac announced in Seller/Servicer Guide Bulletin 2013-27 updated and revised policies related to foreclosures and alternatives to foreclosure, and related to lender-placed insurance. With regard to foreclosures, Freddie Mac is requiring that the “Obtain Credit Bid” functionality be used for all foreclosure sales occurring on or after March 17, 2014. In addition, Freddie Mac advised that it will reimburse up to a maximum total of $500 for the initial property registration and the re-registration, and that, upon request, servicers must assist Freddie Mac or its vendors in obtaining case file documentation. With regard to alternatives to foreclosures, Freddie Mac (i) expanded its standard and streamlined modification programs to include mortgages with pre-modification mark-to-market loan-to-value ratios less than 80 percent; (ii) eliminated the option for borrowers to retain adjustable-rate-terms in connection with a Capitalization and Extension Modification for disaster relief; (iii) provided servicers discretion to determine the length of a short-term forbearance plan for mortgages impacted by an eligible disaster; and (iv) revised evaluation criteria for borrower contributions towards a short sale or deed-in-lieu of foreclosure. Finally, the Bulletin states that servicers may no longer receive compensation or incentives from lender-placed insurance carriers, and servicers or their affiliates may not insure or reinsure lender-placed insurance.